Why would the Fed raise interest rates over the last year by 1 percentage point? Given...

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Why would the Fed raise interest rates over the last year by 1 percentage point? Given...

Why would the Fed raise interest rates over the last year by 1 percentage point? Given the current trajectory of the economy (national and worldwide), what are some possible consequences if they raise interest rates again?

Which do you think is worse for the economy overall, inflation or deflation? Explain your answer.

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Answer 1

Answer #1

Answer - The fed raising the interest rates national and world wide will have two effects -

1 - More interest rates will increase the demand for the investment from worldwide in search of greater returns.

2 - Considering the home country , for them the lending would be costly now so the demand will decrease

The decrease in demand will create the condition of deflation in the economy and the investment for the domestic investors will slow down.

I think that inflation is worse , as the currency goes on depreciating , the prices of the goods keep rising and its goes on for a longer time .

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Answer 2

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